Entergy announces plans to retire NY's FitzPatrick nuclear plant

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Dive Brief:

Entergy Corp. announced it will shut down its 838 MW James A. FitzPatrick nuclear facility in Scriba, New York, by late 2016 or early 2017 due to the cost of maintaining the plant, SNL Energy reports.

Low natural gas prices have squeezed revenue from nuclear generation, creating unfavorable market conditions for the power plant, according to CEO Leo Denault.

Entergy plans to file the plant's retirement plans with the New York ISO and state utility regulators today.

Dive Insight:

Another nuclear facility bites the dust — this time, in New York.

Entergy's announcement over the fate of its James A. FitzPatrick plant follows closely behind its announcement that it would shut down its 680 MW Pilgrim Nuclear Power Station in Massachusetts no later than June 2019. Both plants are casualities of high operating costs and unfavorable market conditions.

"Given the financial challenges our merchant power plants face from sustained wholesale power price declines and other unfavorable market conditions, we have been assessing each asset. As part of this review, we previously announced the closure of the Pilgrim Nuclear Generating Station in Massachusetts and have now decided that despite good operational performance, market conditions require us to also close the FitzPatrick nuclear plant," said Denault.

The decades-old James A. FitzPatrick nuclear plant has generated electricity since 1975, SNL reports, and employs some 600 people. After its closure, Entergy's Indian Point Energy Center will be its only power generation facility operating in New York. Entergy retired another nuclear plant — the 620 MW Vermont Yankee in Vernon, Vermont — at the end of 2014.

An analysis from three major rating companies said up to 11% of the U.S. nuclear generation fleet is at risk for early retirement. While many factors have contributed to the decline in the nuclear generation, the dominant issue of late has been rock-bottom natural gas prices, the analysts say.

Entergy pointed to wholesale market "design flaws" that failed to "adequetely compensate nuclear generators" as playing a role in the FitzPatrick plant's fate. The company said in a statement that Entergy and New York officials have worked over the past two months to reach an agreement that would avoid closing the plant. They were ultimately unsuccessful.

Furthermore, the Obama adminstration's finalized Clean Power Plan has offered a mixed bag for the nuclear industry. Under the plan, states receive credits toward emissions for nuclear facilities currently under construction, but the Environmental Protection Agency didn't include calculations for nuclear plants in their baseline emission rates for each state.

Despite a push for nuclear generation as a carbon-zero power resource, the agency said it would be "inappropriate" to use existing nuclear generation to lower the carbon targets. The nuclear industry responded with disappointment, especially at the fact that nuclear plants that get relicensed to run for decades longer than planned will not be given CO2 credits to help states comply with the Clean Power Plan.